Alternatives to the "suitcase full of £50 notes" method

February 26, 2007 4:45 AM

What is the best, most cost-effective way to transfer about £9,000 from a bank account in the U.K. to another in Spain?

I will be relocating from the United Kingdom to Spain in two weeks. This is a semi-permanent move, and therefore I would like to tranfer the funds in my HSBC current account into my existing Spanish (Caja Madrid) bank account. I have looked at previous AskMe threads for advice, but most of it seems to be quite U.S. specific.

Right now the only option seems to be simply asking my bank to wire the money. While their fees are reasonable, the exchange rate they apply means they get to keep about €150 (vs. the exchange rate quoted at XE.com). It's not as horrible as I had feared, but it still strikes me as kind of cheeky.

I have also considered getting a Lloyds TSB International Account, but they have weird restrictions when it comes to accepting money transfers from third parties into these accounts. This makes it unusable for my purposes, since I plan to become a freelance contractor and those transfers would be my main source of income.

I guess there have to be some British expats in the Hive Mind who have been through this before, so I thought I would ask for your input. Does anyone know of a more cost-effective way to send the money over without much fuss and expense? Any suggestions welcome.

Thanks in advance!

posted by doctorpiorno to work & money (14 comments total)

It's not as horrible as I had feared, but it still strikes me as kind of cheeky.

It costs your bank money and risk to convert currencies. A discount rate of 1 percent is not really unreasonable. I'm not sure if £9,000 is enough to find a better rate.
posted by grouse at 5:03 AM on February 26, 2007

I send money home to Maw in the US (from England) and HSBC to HSBC they waive fees. You mention the cross rate as your only issue; well, FX is an off exchange market meaning there is no single official rate.

So £9000 is about 13,400 Euro and it looks like the spread is adding 150 Euros? That's about 1%. What are the other fees? Have you tried asking them to waive fees alltogether?

And why not use HSBC on both sides? You could then transfer from your Euro account in Spain to your Caja Madrid account.
posted by Mutant at 5:05 AM on February 26, 2007

Grouse - You're right, "cheeky" is a poor choice of words: after all, it is a service and it is only fair that they charge for it. Still, if the same service can be had cheaper elsewhere, I would love to hear about it.

Mutant - Unfortunately, according to this page, it seems like HSBC does not provide personal finance services in Spain, so the HSBC-to-HSBC plan is unlikely to work. Thanks for the idea, though.

The consensus so far appears to be that a 1% loss in the process is pretty reasonable. Does everyone else feel the same way? I am pretty ignorant of financial realities, so the deal I am being offered by my bank might well be better than I thought.
posted by doctorpiorno at 5:37 AM on February 26, 2007

Why are you moving it? Surely you'll get a better rate of interest leaving it in the UK where we have higher interest rates?
posted by tomw at 5:51 AM on February 26, 2007

First, you should consider what tomw says. Second, I have been told that Nationwide offers very good rates—I would ask them.
posted by grouse at 6:10 AM on February 26, 2007

Write a check and wait, or wire it. If you're moving a large sum of money - more like 50,000 pounds than 9,000 - banks will automatically give you a better rate, a conversion rate closer to the actual rate at the time, but you're probably under that threshold.

You should definitely consider keeping your UK account open, whether or not you leave much money in it. You will probably find it handy to have open, and it will be quite difficult to open a UK bank account from Spain.
posted by jellicle at 6:46 AM on February 26, 2007

Self-styled UK money saving expert Martin Lewis has a page of advice on transferring currency abroad.

Citibank offer Sterling and Euro accounts. So you could open a Sterling/Euro account, transfer your sterling into the sterling account, and then make the occasionaly transfer to your Euro account.

Or you could simply take out all the cash, and convert it at your local bank / post office / Marks and Spencers into Euros. Or convert it into Euros at the Spanish end - I've heard that banks offer a better exchange rate when exchanging for their native currency, but have no idea whether that's true or not.

Or you could put it all into Paypal, and then open a Spanish bank account and transfer it out the other end. No idea what they charge though.
posted by badlydubbedboy at 6:53 AM on February 26, 2007

Citibank offer Sterling and Euro accounts.

But they won't give you the interbank rate for transferring GBP to EUR. No one will. Unless you're really a bank.

Or you could put it all into Paypal

Frankly, I would never trust PayPal with that much money.
posted by grouse at 7:12 AM on February 26, 2007

The official exchange rate you find at XE.com is the rate for transactions of $1,000,000 USD or more. Around here (Canada and USA), the typical exchange rate for consumers is 2.5% off the official exchange rate (higher if you're buying and lower if you're selling). 150/9000 is 1.667% so that sounds pretty good to me.
posted by winston at 8:18 AM on February 26, 2007

PayPal's premium on the official exchange rate is 2.5% so PayPal will definitely be more expensive
posted by winston at 8:19 AM on February 26, 2007

150/9000 is 1.667%

It's EUR 150/GBP 9000 which is closer to 1.1 percent.

the typical exchange rate for consumers is 2.5% off the official exchange rate

It is easy to find approximately 1 percent rates for even small amounts in both the U.S. and the UK. You can get a better rate for larger amounts, but I'm not sure GBP 9,000 is enough.
posted by grouse at 8:33 AM on February 26, 2007

Also, PayPal doesn't like to transfer that much money. I used PayPal to move my money to myself from my US Bank account to my Deutsche Bank account while I was living in Germany and after a montrh or two I got an email telling me that I'd been flagged as a possible money launderer.

I talked to them and it's basically just some transfer limit after which they're required to investigate, which turns into quite a pain in the butt.

That said, it was fairly cheap for the transactions and nice because you're able to do it all yourself from your own computer. Since I liked to keep my money earning interest in an investment account in America and move it over in small chunks (maybe not so smart in retrospect, since the dollar's loss versus the euro nearly negated the whole thing).
posted by atomly at 11:44 AM on February 26, 2007

tomw - You have a good point there, and one that hadn't really crossed my mind. I had no idea of the difference in interest rates (there goes my ignorance again), but I will do some research on this and probably ask my bank again to see what they can offer.

Thanks everyone for the info and for putting my bank's offer into perspective. Whatever I end up doing, now I feel I can take a much more informed decision.

Cheers once again, Hive Mind!
posted by doctorpiorno at 5:35 PM on February 26, 2007

Also try the Brit Expat site for advise:

http://britishexpats.com/
posted by zaphod at 6:28 PM on February 26, 2007